Vitul Kwatra is a Business leader and invests in startups. Vitul has 25 years of global experience in P&L growth. We caught up with him to get a better perspective on the state of the Indian economy and the start up ecosystem.
1. Having been into the financial sector all your working life , how do you rate the current economic environment of the world ?
I see the global economic environment currently on a curve rising from a slowdown to growth fuelled by opportunities and innovation. On the supply side, the pandemic has brought the economies to rethink it’s reliance and dependence on traditional sectors. Localization and de-risking the supply chain will lead to efficiencies and availability, which in turn will lead to higher margins/growth for the industries. The demand side had slowed down but is picking up across all geographies. The employment rates have shown a positive move, which will be followed by an uptick in the retail demand. Hybrid work (Home/Office), Hybrid retail (Online/Physical) and Hybrid investments (Health/Wealth) is only changing the avenues of the spend. Quantum is coming back on the overall spends. Human beings inbuilt instinct of resilience and survival is leading the change in our natural behavior as we are on the cusp of growth post the pandemic.
2. What would you say about the investment environment of the world today? Global GDP has shrunk by 10 trillion dollars ! Is that an indicator of a struggle to get the economies of the world up?
Till the time the demand is there, there will be no struggle to bring back the economies. We as human beings in general have a futuristic vision and survival instinct, which is why this phase, will also be short-lived. If you see the Tier1 economies have already started showing signs of recovery, Tier2 economies have actually gained out of this pandemic and Tier3 economies have remained agnostic. While the markets have shown resilience across regions, the real estate and automobile sector recovery will see a recovery in the next 15-18mnths. Due to the ease of doing business, cross border Investments have seen a huge increase during this pandemic. Investments will be attracted in what I call the ecological bubble which focuses on more humane way of producing energy, food, transportation, housing, data, communication and Infrastructure. M2M and AI is leading the demand to be truly One-2-One which also raises challenges for the supplier to keep the cost and emissions to the lowest. It will be good to see how this equation evolves.
3. What is your opinion of the Indian economy? Our exports have hit a record high in July and we seem to be doing fine in the Covid front too?
Indian economy has come out stronger and taller out of this pandemic. The markets have gone up many folds, exports are up, foreign investments are up, local demand and local supply is increasing and it has already become an attractive alternate destination for logistics and production. It has also become one of the few countries to produce COVID19 vaccine acceptable globally. Focus on infrastructure, economical production capabilities along with strong international policy execution will be key to its growth going forward.
4. India is a hub of start ups and as you have also invested in startup’s too. What more can be done to improve this environment ?
India is the center of good start-ups, which is fulfilling the vacuum in this space in India. However, on a 5-stage scale, we are in stage 2 when it comes to the state of the startup environment. To move it to Stage 3 we need to have a few of the big ones fully monetized which will lead to consolidation and new investments in futuristic projects. To move to Stage 4 we need to have startups, which are more global. In India, there is not even one startup, which has global acceptance or usage. This will help create the backend and frontend infrastructure for others to latch on. And in Stage 5 we need to have Indian Startups have M&As happening across geographies. This will enhance the exchange of investments and technical expertise across sectors. Basis the discussions we have in the investment we communities, we agree that the Indian start-up industry is moving in the right direction but needs a formal acceptance by the government which will bring in the governance, framework and push to make it a true start-up hub for the world.
5. What according to you will be the future of investments? As banks in india struggle to negate the NPAs , there is a massive shift in investment habits ! What’s your take ?
Yes I agree that the Banks are struggling to some extent but all this is temporary. I have full confidence in the central bank and the financial policies of India. We have shown the world the same in the past crisis also. On the retail side the investment habits have seen a shift but for the good. Thanks to the infrastructure push and Technology availability, people have moved to Tier 2 and 3 cities for good, which is boosting up inclusive growth for the country. Real estate sector has been under restructuring from a governance perspective and is now showing growth, automobile sector is showing positive signs after a low of 6 quarters, Infrastructure sector has shown the needle turning positive with the corporate demand of increasing the production capabilities, pharmaceutical and life sciences sector has shown the maximum growth which will continue for some time and the ITES sector has got fuelled up because of the recent pandemic. All in all, the Indian Economy is all set to take the center stage in the world economy, we just need political stability, ease of doing business, good governance and effective international policy